Slow recovery by state won’t stop program cuts
The state’s economy is improving, but not enough to substantially change how state lawmakers will have to draft its budget for the next fiscal year, legislative economists said Friday.
Natalie Mullis, chief economist for the Colorado Legislative Council, told members of the Joint Budget Committee the state’s economy is showing signs of improvement, but it isn’t nearly enough to prevent the nearly $1 billion in program cuts the Legislature will have to approve.
“We are beginning a recovery, but it’s very, very slow,” Mullis said. “Like I told you in December, many times when you hurt the most is immediately after you have fallen and before you have started to recover. We’re just about there.”
Mullis said she increased the state’s revenue expectations by about $230 million partly because she underestimated corporate profits.
Still, she and Todd Saliman, director of Gov. Bill Ritter’s Office of State Planning and Budgeting, said that only meant the state’s finances weren’t getting worse.
“What that means is no additional cuts beyond what you’ve already done and beyond what we’ve requested are needed,” Saliman said. “The 2010-11 (fiscal year) is going to continue to be a very volatile year.”
Both economists predicted the state’s revenue shortfall will continue to last for at least another year, possibly two. But there were good signs in some parts of their forecasts, they said.
Mullis said job losses statewide had bottomed out, but full employment recovery remains years away.
She also said personal income and consumer spending are rebounding, indicating the state is in no immediate danger of a double-dip recession.
Although the forecast didn’t offer more bad news for commitment budget writers, the good news was it means the Legislature could afford to roll back measures that temporarily or permanently eliminated several tax exemptions that lawmakers approved earlier this year, said Senate Minority Leader Josh Penry, R-Grand Junction.
“According to the budget and revenue forecast released by the nonpartisan Legislative Council, Colorado has $35.1 million more available in the general fund than previously predicted, reflecting a revenue upturn,” Penry said.
“That is more than enough to cover the $13 million that will be generated from the tax increases this fiscal year.”
Ritter, however, said that would be premature.
“We need to hold the line on the decisions we’ve already made and take a longer view than just this one forecast,” Ritter said Friday.
“This is still a volatile economy, and it would be irresponsible to reverse any of our earlier decisions.”